What is accrual accounting?

The other side of the transaction affects a balance sheet account which only central Financial Services has access.

What is the threshold amount for preparing accruals and deferrals?

$5,000 per transaction.

ACCRUAL

What is an accrual?

An accrual is an entry used both to record an expense for services or supplies received but not yet invoiced and to record revenue earned but not yet invoiced.

Example

Ordered and received office supplies but will not receive the invoice prior to the year end processing deadline.

The transaction is recorded as an expense in FIS prior to year end by preparing an accrual. All accruals are reversed on May 1st of the new fiscal year. When the invoice is received, it is processed and netted against the accrual reversal. Accruals are often estimates since the exact amount may not be known. The variance between the accrual and actual requires analysis should the difference be significant.

How do I prepare the debit memo?

1. The debit memo is sent to Lou Ranalli, Financial Services by the Finance Office.

2. Fill the body of the debit memo with a description of the good or service. Enter the amount if known, otherwise provide an estimate. Provide back up documentation on the amount of the transaction. If it is an estimate, show your calculations.

3. Complete only the debit side of the debit memo. Financial Services completes the credit side of the transaction.

DEFERRAL

What is a deferral?

A means of recording revenue received for a fiscal year in the future.

Revenue Example

Funds have been received for an event such as a conference scheduled in the next fiscal year.

The funds are moved to the new fiscal year in FIS prior to year end processing by preparing a deferral. All deferrals are reversed on May 1st of the new fiscal year. When the service is rendered, it is netted against the deferral reversal.

Expense Example

Long term lease payments

How do I prepare the debit memo for a deferral?

1. The debit memo is sent to Lou Ranalli, Financial Services by the Finance Office.

2. Fill the body of the debit memo with a description of the good or service. Enter the amount if known, otherwise provide an estimate. Provide back up documentation on the amount of the transaction. If it is an estimate, show your calculations.

3. Complete only the debit side of the debit memo. Financial Services completes the debit side of the transaction.